TLGeer

Actually, it is reflected on the W-2 for the year for which it is a deferral. Tom Geer

The disaggregation rules assume a single employer, as rewuired under

This is a routine thing for banks. From the sounds of it, the plan was solicited and switched over after the loan was made, which creates a problem proving that there was a quid pro quo arrangement. However, the fiduciary duty rules do not require a quid pro quo. Essentially, they are process oriented. The basic issues her would be (1) whether or not the fees were fully disclosed and their impact evaluated, and (2) whether the decision process legitimately concluded that other, plan-related factors outweighed the higher fees. It sounds like you looked at all the proposals. Is that true? If so, it is highly unusual for the sponsor to ignore the recommendations of their consultant. The sponsor might pick one of the top two or three, but I've never seen a sponsor pick the dog. You don't have standing, so you'd have to drum up a participant or contact the DOL. Once you have done that, lots fewer sponsors will want to hire you to do a proposal review. And this sponsor would probably call their lawyers to see about suing you. Tom Geer

I have been preaching a version of that gospel for some time. The basic problem comes not from the proposed regulations but from 403(b)(5), which says that two or more contracts are treated as one contract under 403(b) and which has been ignored in the past. In a multi-vendor environment, the contracts may individually meet the requirements of 403(b), but in the aggregate they are going to have limitations that exceed 403(b). Also, on the distribution side, they are going to permit excessive loans, etc. One vendor is one solution, but not the only one, and not one that is available at all if the employer (e.g., a school district) has to allow multiple vendors. Another, which we do here, is to create a wraparound plan (or non-plan) document, under which the various vendors have something like the status of a trustee under a qualified plan, and to route loans and distributions through an administrator that ensures compliance with dollar limits and prevents multiple hardship distributions. Tom Geer

If the plan is nongovernmental and the plan document doesn't have any rules in it, there are no rules about when the employer has to start investing the deferrals. The employee, as FDG rightly pointed out, has to have enforceable rights not subject to a substantial risk of forfeiture at 12/31, but the calculation of the amount under a formula can be done in the subsequent year and it never has to be invested (although not doing some kind of investment probably makes the plan a defined benefit plan). It does not permit the kind of flexibility employers have with discretionary profit sharing and matching contributions to set the amount or rate in the subsequent year. If the plan is governmental, the rights have to exist at 12/31 and the deferral has to end up in a trust within a reasonable time (whatever that is) after 12/31. Take a look at Regs. 1.457-8 and 1.457-2(b) (which has a useless definition based on the undefined term "the amount of compensation deferred"). Tom Geer

If the plan is not a governmental plan or a church plan that is ERISA-exempt, then it has to squiggle out of ERISA funding rules. In theory, a non-profit 457 plan could be an excess benefit plan, but in practice that is not done. That means that most non-profit 457 plans are structured as plans for a select group of management and highly compensated employees to avoid ERISA funding rules that would cause the plan to lose 457 status. Tom Geer

Latest NRA is 70. Earliest NRA is lesser of 65 or "the age at which participants have the right to retire and receive, under the basic defined benefit pension plan of the State or tax-exempt entity (or a money purchase pension plan in which the participant also participates if the participant is not eligible to participate in a defined benefit plan)" The plan can pick an age in that range, or allow the participant to select the age. If the participant is in another 457 of the same employer, and it fixes an age, this plan ought to say that the NRA is determined under the first plan the participant was in. Unless your wife is a qualified police or firefighter. If the plan uses age 55, and "the basic defined benefit pension plan of the State or tax-exempt entity (or a money purchase pension plan in which the participant also participates if the participant is not eligible to participate in a defined benefit plan)" has a later age, the NRA ought to be the later age. Of course, the 457 catch-up is a real catch-up, so there has to be underutilization in prior years. If there was not, the NRA discussion is moot. Is the plan sponsot governmental? That affects what kind of pressure you can bring to bear. Tom Geer

Regs. 1.457-9(a)(2)(ii) says: "Amounts deferred under an eligible governmental plan must be transferred to a trust within a period that is not longer than is reasonable for the proper administration of the participant accounts (if any). For purposes of this requirement, the plan may provide for amounts deferred for a participant under the plan to be transferred to the trust within a specified period after the date the amounts would otherwise have been paid to the participant. For example, the plan could provide for amounts deferred under the plan at the election of the participant to be contributed to the trust within 15 business days following the month in which these amounts would otherwise have been paid to the participant." Trust of course includes annuity. Three months seems longer than reasonable. However, there are at least two problems here. First, the money has to be sent to Nationwide in that time period, not shown on Nationwide's records. Second, governmental plans don't have to comply with 457 until (1) the IRS tells them they are out of compliance, (2) 180 days have passed, and (3) the next year has started, so your can effectively ignore your comments without endangering 457 status. The plan document itself gives you legal rights, including the right to have its rules on when funds should be transferred and credited to your account applied. And the plan document probably, repeat probably, parrots the requirements in the regulations. However, you are going to have to get a copy of the plan document and read it. Good luck. Tom Geer

Regs.